Banks Have No Idea How to Handle Millennials
PORTLAND, Ore. (TheStreet) -- If you saw the entire banking system collapse and spent the majority of your early career riding out the consequences in a low-wage job while remaining financial institutions helped themselves to bailouts, would you really want to help out the financial services sector?
No. In fact, there's a strong chance that the words "financial services sector" alone might set you into a rage spiral from which you'd need a break from the barista station and a few hours of social media time to recover.
Corporate Insight, a market research firm for the financial services industry, recently released a study titled The Millennial Shift: Financial Services and the Digital Generation with findings that shouldn't surprise even the financial services industry anymore. As it turns out, millennials have had just a few problems with college debt and employment in the past few years and don't necessarily see the financial services industry as their ally.
"Millennials put a high value on transparency and are wary of financial institutions, particularly when it comes to ambiguous fees or pricing," says James McGovern, Corporate Insight's vice president of consulting services. "They also have very high expectations in terms of online and mobile services that many firms do not meet today."No, financial services probably aren't high on the list for this particular generation. About 36% of American workers older than 25 with a high school education or less started losing jobs in 2007 and haven't stopped. About 767,000 fewer of them reported having a job in 2012 than in 2010, and 2 million workers in that demographic left the job market altogether during that span. A college education hasn't always helped, either. Even college graduates have seen their average pay decrease by $3,200 since 2000. A full 284,000 of them earned minimum wage last year, while the average U.S. student loan debt topped $27,000 -- a jump of 58% in just seven years. Though job numbers have recovered a bit, roughly 65% of those regained jobs have been of the low-wage variety. Unfortunately, the National Employment Law Project says nearly 60% of all jobs lost during the recession paid middle-income wages or better. risky investments, they expect those they invest with to be socially responsible and they really can't stand institutions that they feel are out to cheat them. Corporate Insight looked at four areas of the financial services industry -- banking/credit cards, brokerage/investing, insurance and retirement plan services -- and came up with recommendations for companies looking to make peace with millennials and actually help them out with their finances. Here are the highlights: 1. Get mobile or get out: You know all those features on your bank's website that aren't available on its app? Yeah, they're not helping anybody. A higher percentage of millennials own smartphones than any other generation. For 18% of millennials, they're the only point of access to the Internet, compared with 5% of Generation X and 3% of baby boomers. Oh, and those laptops and desktops that are about 20% of connected devices now? They're going to be just 13% by 2017, with tablets alone taking 16.5% of the market and smartphones absorbing 70%. So why can't banks hook up the 69% of millennials already accessing financial services through smartphones? Because they just can't understand why millennials want no part of their long-range plans. They've been through enough market swings to know they can't plan beyond the immediate future without any certainty. If banks can help them save for a vacation, a house or a family, it's a start, but banks would rather shove them into retirement plans they have absolutely no use for. It also turns out that they're looking for investment advice, because standardized testing in schools doesn't account for useful things like that. Instead of giving them instructional videos and interactive tools to help them achieve investment goals, though, institutions keep giving them calculators and pictures of old farts on a beach. Nobody cares about grandma's dream retirement in Boca when you can't figure out how you're going to afford your next day off.
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